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CAS EE 309 Intermediate Environmental Analysis and Policy

Published : 05-Oct,2021  |  Views : 10

Question:

This part of the Group Project will examine both the internal and external environment in which your chosen organization operates. This is often called a SWOT analysis.

In the External Analysis you will describe the trends and threats facing your organization as well as its competitors and others in its industry. Also, describe the external environment for your client organization including any opportunities or threats based on your chosen OB process.

Answer:

Organizational behavior background

The chosen behavior for the assignment is organizational change. The changes are mostly related to the alteration in the structure, its strategies, the operational methods and the process combined with technical advancements and the work or organizational culture. As per the topic the prospects of any organization is completely dependent on the acceptance or the changes.

Auto nation started its competition with Car max and since the company starteged facing tough challenges due to the rise in the sales of highly profitable new cars, the sale of old or used cars have gradually declined, so in order to mitigate such an issue the organization restructuring of its entire operations and strategies. In order to achieve such CEO, Mr. Michael Jackson took the decision to start the business afresh primarily focusing on the customer behavior, scraping of the remaining used car super stores, focus in the new car sales along with the improvised customer service. The decision was taken to close down the rest of the used car stores and begun focusing in the location strategies to help the business grow.

Gradually the sales in the used car segment begun to grow with the sales of the new car began to decline due to the gradual plateau in the market division which was one of the probable outcomes of the financial crisis that struck in the year of 2008. Taking the advantage of the situation, this crisis was turned towards the beneficial end of the used car business, by Auto nation. Eventually with the improvement of the critical situation, even though the sales of the new cars have been boosted yet there was a skeptical perception that prevailed amongst the people related to the new cars. People began to return the slightly used cars to the dealership and a new method of low lease with low payment in the car loans. As a result people have found more valuable way of low mileages, in the off lease cars than the new ones. However, the car manufacturers and the suffered tremendous setbacks, who did not fore see this shift, although this shift was predicted and understood by Mr. Jackson, who took full measures to use this situation in the advantages working on full scale upon the technological advantages as well as reducing the hassles of buying a new car. So basically, the organization worked itself based on the customer centric methods, along with the strategic reforms and challenging the crisis with full focus by channeling the resources to the full capacity. However, the organization is primed in keeping on improvising the organizational culture focusing on the diversity management to understand the waves of ideological differentiation amongst the employees, thus enhancing the work culture. However, the organizational culture is different for the next dealership can keeps on changing, therefore it is extremely difficult to analyze the predictability of any particular pattern of work culture that prevails within the entire Auto nation business. Auto nation currently employees over 25000 employees across the nation, in over 300 store front, so it would be difficult to lay a verdict on the exact prevailing work culture, though it can be assumed with the circumstantial evidences, that the company does focus on the employment patterns along with the diversity management within its dealerships.

Internal analysis of AutoNation

Strengths

· AutoNation has one of the strongest distribution networks that has been built over years of operations that was extremely reliable and dependable in its character, which is influential in turn for the company to flourish in the highly growing and competitive automobile market (Borman, 2014)

· AutoNation has a triumphant Go-To-Market (GTM) strategy plan that has successfully helped the company reach its customers thus helping it build a strong competitive advantage over the other companies. The company armed with such a strategic plan has clear blueprint of the entire logistics operation of the organization (Kim & Mauborgne, 2014)

·  AutoNation is thriving in the execution of newer projects and improvising older ones to successfully generate revenue as well as keep the flow of cash in the business uninterrupted and free, thus enabling the company to generate a good return in the capital expenditure (Brigham & Ehrhardt, 2013)

· With company having a strong flow in the cash, the company is venerable to the reception of diverse resources that is in turn instrumental for the carrying out of newer projects, thus favoring the organizational expansion (Brigham & Houston, 2012)

· The automation of the organizational activities has brought a consistency in the quality of the products that are being offered by the company. This in turn has helped the company to balance itself, up and down based on the market situations as well as the customer requirements (Goetsch & Davis, 2014)

· The successful and the well maintained track record of the product inventions as well as the integration of the complementary firms through merging and acquisition to helped the company to advance both technically and financially (Vazirani & Mohapatra, 2012)

Weakness

· The rising gaps in the product range offered by the company as well as the lack of choice gives the competitors to land a strong foothold in the competition

· Higher investment is considerably necessary in terms of newer inventions based on the scale of expansion and growth

· The unsuccessful attempts to create a diversified work environment in the firms is one of the biggest weakness

· The inability to tackle and manage the challenges that came from the newer entrants in the market segment that resulted in the loss of market positioning

· The limited scope of success of AutoNation to move into other segments apart from automobiles, in other words the limited success outside the core business activities

· The higher attrition rates of AutoNation is one of the major weakness since it spends more than the other companies in terms of training the employees

Opportunities

· The market development would highly favor the market dilution of the competitive advantages and help AutoNation perform better in comparison to the other companies (Kotler, 2012)

· The core competencies can facilitate the success of the other production fields (Kinicki & Kreitner, 2012)

· The new and improvised technology provides AutoNation an opportunity to practice the diversified pricing strategy

· The lower inflation rate can help AutoNation bring more stability in the market and help in offering credibility to the customers with a low interest rate

· The lowering of the cost of transportation can help AutoNation bring down the cost of the products that are being offered thus providing  an opportunity for the company to flourish

· The newer environmental policies, technologies and the opportunities would help AutoNation to perform and represent itself to gain a greater market share in the newer product segments

Threats

· The demand some of the highly anticipated products are seasonal in nature and any unlikely event in the peak duration can affect the business

· The rising raw materials cost can pose an eminent threat to the company’s profitability

· New legal regulations can pose a threat to the existing products

· Intense competition from the other companies can pose a grave threat to the company

· Newer technological inventions by the competitors disrupt the business of the company and is a consistent threat to the company  

External analysis

The external analysis of the company has been done with reference to the Porter 5 forces model.

Competitor Rivalry

 

The intense rivalry from the existing top players in the automobile industry such as the Penske Automotive Group and Sonic Automotive group can possibly bring down the company’s profitability as well as the profitability of the industry as a whole.

Supplier Power

 

Above all the company purchase s the raw material from the various suppliers. Since suppliers stand in the most advantageous position, they can lend a tough negotiation competition to extract a higher from AutoNation. The overall impact of the supplier bargaining power can thus lower the effective profitability of the company.

Buyer Power

 

The customers are often demanding at times, who probably wish to buy the best offering in the minimum price. The bargaining pressure from the customer can lend a huge load on the profitability margin of AutoNation, in the end. The smaller yet powerful customer base of AutoNation is a possible threat for obtaining the products in a lower price (Dent & Whitehead, 2013).

Threat of substitution

 

With a new product that has been introduced which meets the customer’s needs can affect sustainability of the company, for example, electric cars can be a threat to the fuel operating vehicles. In this manner competition from the substitutes can definitely disrupt the business of AutoNation in a certain manner.

Threat of new Entry

 

The new entrants in the automotive dealership industry bring newer inventions and strategies that can put a lot of pressure on AutoNation, forcing it to lower its existing profitability parameters. In order to manage this additional competition, it is necessary for AutoNation to manage these challenges and effectively barricade its competitive advantages.

 External environmental factors analysis

The external factors that directly or indirectly influence AutoNation has been done with the help of PESTLE analysis. The factors that are crucial and influences AutoNation have been identified and briefly cited.

Political

· Bureaucracy and interference in the Dealership

· Legal framework for the contract enforcement

· Politically favored trading partnerships

· Intellectual property protection interventions

· Antitrust laws against the dealerships

· The pricing regulations

· Political legislations on taxation affecting the dealership

· The wage legislations related to the minimum and the overtime activities

· Mandatory benefits for the employees

· Laws for regulating the safety in workplace

· Product labeling and the copyright acts necessity in the dealership

 

Economic

· The government intervention in the free market

· Exchange rates and the economic stability in the host country exchange (Galí, 2015)

· Education standards in the economy

· Economic growth rates

· Unemployment rates

· The fluctuations in the inflation rates

· The differentiation in the interest rates

· The changes in the business cycle such as prosperity, recession and recovery

· The differentiation in the advantages of the host nation and the service sector in the same nation

· The necessity and requirements to meet the efficiency of the financial markets

· Cost incurring infrastructures of the firm

Social

· The demographics and the skills of the existing population

· The class, power and the hierarchy of the society

· The cultural attributes of the society

· The entrepreneurship spirit and the broader distribution of the society

· The perspectives and the attitudes related to the health, environmental consciousness has influencing impact on the firm

· The diversification and the differentiation in the leisure interests (Baye, von Schlippenbach & Wey, 2017)

Technological

· The recent and updated technological innovations of AutoNation’s competitors

· The technological impact on the products that is being offered by the firm

· The impact of cost structure in the dealership industry impacts on the technological progress

· The impact on the value chain also affects the technological values of AutoNation

· The differentiation in the technological diffusion is also fundamental for the impact

Environmental

· The external and basic factors such as the location, seasonal changes and geographic factors are influential in the cause

· Legal provisions affecting the environmental concerns lays a influencing impact on the company

· The air and water pollution regulations implied on the entire industry is a crucial influencing factor

· The waste management services in the sector is a factor that should be considered

· Attributions and attitudes towards the eco-friendly products is a major affecting concern

· The outlook towards and support for the renewable source of energy major influential factor

Legal

· Anti-trust law in Auto Dealerships industry and in the overall country

· The discrimination law in terms of employment and workforce

· The patent rights and copyrights along with the intellectual property laws are one of the crucial concerning factors (Chisum, 2016)

· The laws for consumer protection as well as the electronic commercial activities

· The employment along with the Health and safety laws is a significant factor that is influential and should be taken into account

· The laws that enforces the data protection is a vital factor affecting the company

References

Baye, I., von Schlippenbach, V., & Wey, C. (2017). One-stop shopping behavior, buyer power, and upstream merger incentives (No. 27). DICE discussion paper.

Borman, W. C. (2014). Organizational citizenship behavior and contextual performance: A special issue of human performance. Psychology Press.

Brigham, E. F., & Ehrhardt, M. C. (2013). Financial management: Theory & practice. Cengage Learning.

Brigham, E. F., & Houston, J. F. (2012). Fundamentals of financial management. Cengage Learning.

Chisum, D. S. (2016). Double Patenting (Vol. 3). Chisum on Patents.

Dent, M., & Whitehead, S. (Eds.). (2013). Managing professional identities: Knowledge, performativities and the'new'professional (Vol. 19). Routledge.

Galí, J. (2015). Monetary policy, inflation, and the business cycle: an introduction to the new Keynesian framework and its applications. Princeton University Press.

Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Kim, W. C., & Mauborgne, R. A. (2014). Blue ocean strategy, expanded edition: How to create uncontested market space and make the competition irrelevant. Harvard business review Press.

Kinicki, A., & Kreitner, R. (2012). Organizational behavior: Key concepts, skills & best practices. McGraw-Hill Irwin.

Kotler, P. (2012). Kotler on marketing. Simon and Schuster.

Vazirani, N., & Mohapatra, S. (2012). Merging Organisational Culture through Communication-'Post Mergers & Acquisitions'. SIES Journal of Management, 8(1).

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